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Mortgage lending up while approvals dip

Mortgage lending rose at an unprecedented rate last month despite lower than expected approval figures.

The Bank of England has revealed that mortgage lending increased by £10.58 billion in December, the greatest monthly rise since records began in 1993 and well in excess of the £9.5 billion gain that had been anticipated.

However, new mortgage approvals numbered just 113,000 during the month, some 12 per cent down on the three-year high posted in November of 129,000.

It remains to be seen whether the Monetary Policy Committee's quarter point interest rate hike to 5.25 per cent earlier this month will further dampen enthusiasm for mortgages.

"There are some signs the housing market may be cooling," Philip Shaw, an economist from Investec, told Reuters.

"Mortgage lending was robust but that lags approvals numbers."

Many experts are predicting that further interest rate rises could be on the way in addition to the three since August, as the Bank attempts to curb inflation.

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30/01/2007 17:26:22

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